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Cash Flow Management and Investments

#18.7|EURm improvement in free cash flow through measures for the regulation of net current assets.
Free cash flow of the Gorenje Group (in MEUR)
in MEUR20112010Change
Net income 9,1 20,0 -10,9
Amortisation and depreciation expense 50,2 52,2 -2,0
Net cash flow 59,3 72,2 -12,9
Capex -47,5 -44,7 -2,8
Disinvestment 4,4 4,5 -0,1
Investments in net current assets 19,6 -14,2 33,8
- change in inventories 12,0 -6,0 18,0
- change in trade receivables 50,4 -25,3 75,7
- change in trade payables -42,8 17,1 -59,9
Free cash flow 35,8 17,8 18,0
Source: Data from Gorenje Group

In 2011 we created free cash flow in the amount of EUR 35.8 mio. The lower net cash flow was due to the worsening of profitability, but on the other hand investments in net current assets decreased, thus significantly increasing free cash flow.

In the area of investments, we continued to implement our policy of focusing on the development of home appliances, within the scope of which we developed a new generation of washers and dryers. We also invested in the relocation of thermal and heating systems from Slovenia to Stara Pazova in Serbia, and the set up a new production location in Zaječar, Serbia. Part of the funds were also allocated to coordinate the business integration of Asko into the Gorenje Group.

The greater part of the funds was allocated to investments in technical equipment (EUR 25.7 mio), buildings (EUR 8.8 mio) and intangible assets (EUR 6.4 mio).

Investments in 2011 were still significantly lower than those in the pre-crisis year of 2008, which amounted to EUR 76.8 mio, but increased by EUR 2.8 mio in comparison with 2010.

The movement of investments in net current assets in 2011 points to significant structural changes in the management of inventories and receivables, while the movement of trade payables had a negative impact on free cash flow due to the different structure of purchasing sources as well as the time/quantity schedule of purchasing.

Investments and share in the revenue of the Gorenje Group (in MEUR)
Investments (in MEUR)


Share in revenue (%) 3,2 3,3
Source: Data from Gorenje Group

Investments by Division

In line with the strategic directive of focusing on our basic activity, 85.4 percent of all investments (EUR 40.5 mio) in the past year were made within the Home Appliances Division. The structure of these investments was similar to that of the entire Group: technical equipment (EUR 22.5 mio), buildings (EUR 6.6 mio) and intangible assets (EUR 6.2 mio).

The remainder of investments were divided among the Ecology, Energy and Services Division (EUR 5.1 mio) and the Home Interior Division (EUR 1.9 mio). Investments in technical equipment were predominant in both divisions.

Division Structure of Investments in 2011
Home Appliances Division 85,4%
Home Interior Division 4,0%
Ecology, Energy and Services Division 10,6%
Source: Data from Gorenje Group
Division Structure of Investments in 2010
Home Appliances Division 75,8%
Home Interior Division 5,9%
Ecology, Energy and Services Division 18,3%
Source: Data from Gorenje Group